The Making Work Pay Tax Credit is once again available for taxpayers to claim on their income tax return this year. Taxpayers who file a 1040 or 1040A are eligible, but must claim the tax credit on Schedule M, Making Work Pay Credit tax form.

Although the eligibility to claim the Making Work Pay tax credit has income limits, it is refundable – meaning that those eligible can get the tax credit even if they owe no tax.

Most eligible taxpayers qualify for the maximum Making Work Pay Credit of $800 for a married couple filing a joint return or $400 for other taxpayers. Any eligible couple filing a joint return whose earned income is $12,903 or more qualifies for the $800 maximum credit. This is true even if the income is earned entirely by one spouse. Other taxpayers qualify for the $400 maximum if their earned income is $6,451 or more.

For most workers, the credit is based on the taxable wages reported to them on Forms W-2. Self-employed individuals figure the credit using the net profit or loss they receive from a business or farm. Additional calculations are necessary for some taxpayers, including those who have net business losses, or foreign earned income. More information, including a worksheet, can be found in the instructions for Schedule M.

Some taxpayers are not eligible for the making work pay credit, including:

• File a joint filers with a modified adjusted gross income (MAGI) of $190,000 or more.
• Other taxpayers whose MAGI is $95,000 or more.
• Anyone who can be claimed as a dependent on someone else’s return.
• A taxpayer who doesn’t have a valid social security number.
• Joint filers, if neither spouse has a valid Social Security number.
• Nonresident aliens.

Other taxpayers qualify for the credit but must reduce the amount of the credit they claim, including:

• Joint filers whose MAGI is more than $150,000 but less than $190,000.
• Other taxpayers whose MAGI is more than $75,000 but less than $95,000.

See Schedule M and its instructions for details.

Taxpayers should take advantage of the making work pay tax credit by filing a 1040/1040A along with a Schedule M.

For additional tax information, tax tips and tax help, visit the IRS website

source: irs.gov